October 25, 2010 - "We are delighted to report an outstanding third quarter of 2010 as Lorillard and its flagship brand, Newport, continue to outperform the industry. Our total portfolio of brands has once again posted record retail market share numbers for the quarter," stated Murray S. Kessler, the new President and Chief Executive Officer of Lorillard.

The company reported its net income at $274 million, up from $235 million it had reported for the corresponding time period of the last year. Net sales increased to $1.57 billion in the third quarter of 2010, compared to $1.42 billion in the third quarter of 2009, an increase of 10.4%, resulting from higher unit sales volume, higher average prices and lower sales promotion costs accounted for as a reduction of sales.

The third largest manufacturer of cigarettes in the United States saw its net profit surge by 16.6% to $274m, while revenue rose by 12.6% to $1.07bn.

The company said cigarette volumes were up by 5.8% to more than 10 billion cigarettes, helped by gains of 2.9% at its Newport menthol brand and a 30.9% jump in sales of lower-priced brands such as Maverick. The company's overall US market share increased 1 point during the quarter to 12.9%, while Newport's share of the menthol market grew 0.9 points to 35.9%. The Newport brand owns the menthol category, with 35% market share. For the past 17 years this number has risen, despite formidable attempts by competitors to invade the space.

Newport volume this year is growing, up 2.6% through nine months.

Most U.S. tobacco companies are facing declining shipments in a domestic market where the number of smokers are decreasing. Last week, rivals Reynolds American Inc. and Altria Group Inc. both reported selling fewer cigarettes than a year earlier. Last week, Altria, owner of the nation's biggest cigarette maker -- Philip Morris USA had a decline in volume of 2.4 percent. Meanwhile, No. 2 Reynolds American had a decline in volume of 2.6 percent.Lorillard, the oldest continuously operating U.S. tobacco company, spun off from Loews Corp. in 2008.

Consolidation is well underway in the tobacco industry. And the one-product focus (Newport accounts for 94% of Lorillard’s revenues), clean balance sheet and solid growth make Lorillard the most attractive target. It would be a cinch to integrate and would be immediately accretive to earnings. As you might expect, potential suitors abound. Reynolds tops the list. But Philip Morris, Imperial Tobacco and Japan Tobacco are also in the mix. (Lorillard, Inc. (NYSE: LO): Five Reasons This Stock Will Smoke The Markets by Louis Basenese, Advisory Panelist, The Oxford Club, istockanalyst.com, 10/26/2010. (June 5, 2008 - Lorillard May Be Takeover Target After Spinoff..)

CEO Murray Kessler, who took over in mid-September, said the company "is not in need of a course correction," he is completing a strategic review to look for other opportunities for Lorillard. Kessler, who most recently served as president and CEO of Altria Group Inc.'s smokeless tobacco subsidiary UST, said Lorillard's venture into smokeless tobacco is on hold during the review process. (More - Lorillard will launch new moist smokeless product in not-too-distant future..)